UC Board of Regents, March 2017    

That is the question.

This is the answer: Never.  

Or not at least until the campuses fight and change current Office of the President (UCOP) budget ideology and practice. They have never done that.  Not yet.  

I’m going to compare UCOP’s January state budget show with their offstage borrowing.  State funding yields little, while the debt yields a lot.  

I’ll keep my eye on two major implications for the campuses. The first is a lock-in of structural deficits with continuing cuts to the educational core--to both teaching and research.  

UCLA Royce Hall on May 14, 2018   

By early spring of the annus horribilis 2025, the UCLA Senate had lost patience with a UCLA Administration that had locked it out of any meaningful role in major decisions.  

The new CFO, Stephen Agostini, appointed in 2024, wasn’t working with the Senate in established ways. A new chancellor, Julio Frenk, had arrived in January, was to be inaugurated on June 5^th, and seemed okay with increased opacity.  The Senate chair, Kathy Bawn, must have been worried that something much worse than shared governance could get locked in by the new administration. 

Mosteiro de Santa Clara-a-Nova,
Coimbria, Portugal on April 26, 2025   

by Trevor Griffey, UC Irvine

 Before 2025, California Governor Gavin Newsom developed a reputation for being a modest advocate for public higher education compared to his predecessors. This year, he proved that this reputation depended on flush state budgets, not on principle. 

 

When Newsom first came into office in 2019, the state had a projected $20 billion surplus, which allowed Governor Newsom to substantially boost spending for public higher education as part of what he called a “California for All” budget for 2019-20. 

 

And in 2022, with the state of California still receiving substantial CARES Act funding from the federal government, Newsom negotiated a 5-year “compacts” with the University of California and California State University systems that committed him to advocating for 5% annual increases to UC and CSU budgets. In exchange, the school systems committed to increase enrollment of California residents and increase student retention and graduation rates.

 

Though the compacts were legally nonbinding, they promised a sense of stability and modest recovery to UC and CSU after decades of inadequate and unpredictable funding. Unfortunately, they would soon be shredded because of a catastrophic accounting error.

 

Years of Austerty to Pay for Budget Mismanagement

 

According to CalMatters reporting, during the same legislative session that Governor Newsom negotiated the compacts, budget analysts working in his Department of Finance massively overestimated tax revenue for future years. They treated an anomalous spike in income taxes as normal, and over-estimated state revenue in future years by $200 billion per year. Legislators relying on these projections believed that they were balancing the state’s budget in 2022, and thereby set the state on a course to spend hundreds of billions of dollars more than it would collect in taxes. 

 

As the effort to undo the damage of faulty budget projections continued into 2024, Governor Newsom proposed “deferring” funding increases in the compact to future years. UC and CSU leaders successfully negotiated to receive a modest increase to their general funds in 2024-25, but in exchange for accepting an 8 percent cut in 2025-26. Since the Governor and the state legislature were also proposing an 8 percent cut to other state agencies, the shared sacrifice seemed fair. The compact was temporarily saved, but the Governor’s commitment to it was effectively over.

 

Governor Puts Majority of Budget Cuts Onto Public Universities

 

Budget cuts negotiated in 2024 seemed like a done deal. Then something unexpected happened: new, more optimistic revenue forecasts came in, and the state of California entered 2025 with a projected $363 million budget surplus.

 

The Governor could have proposed to use some of this money to give a reprieve to the UC and CSU systems, or try to sustain the compact another year. 

 

Instead, the Governor’s January budget proposal reduced planned cuts to state agencies, while leaving the 8 percent cut and compact deferral in place for UC and CSU. 

 

As the Legislative Analyst Office has highlighted, this move increased state government spending by $2.4 billion over the 2024 budget deal. The Governor also proposed increasing discretionary spending by $507 million, and proposed $150 million in new tax breaks for 2025-26.

 

To pay for this new spending, as well as cover billions of dollars of unexpected Medi-Cal expenses and rising costs for other programs, the Governor proposes to withdraw state reserves by about $7 billion in 2025, leaving $17 billion for next year. Remarkably, the Governor did not propose using any of those reserves to prevent or reduce cuts to public universities.

 

Indeed, whereas the State’s Special Fund for Economic Uncertainties is normally kept at $3.5-4 billion, the Governor proposed to increase that fund to $4.5 billion. If the Governor had simply thought to keep it at a normal $3.75 billion, he could have eliminated cuts to the UC and CSU system entirely for 2025-26. 

 

The rhetoric about the state budget in Sacramento is pessimistic. Concern that Trump’s reckless actions will weaken the economy further add to a sense of foreboding. Cuts to essential services seem inevitable, and this rhetoric of inevitability undermines politicians’ willingness to vote against the Governor’s proposed budget.  

 

Staff for the California Assembly’s subcommittee on education finance have instructed legislators that even though “CSU appears to be facing a fiscal crisis,” and “UC clearly faces significant financial challenges,” politicians should focus their hearings less on stopping the cuts and more on how the school systems “will weather increasing costs and potentially declining state and federal revenue.” 

 

This fatalism is baffling— more cowardice than analysis.  Decisions made by the Governor demonstrate that the need for cuts to higher education has been manufactured by treating UC and CSU differently than other state agencies. While state budget cuts may be necessary, they are being spread unevenly for political reasons, not financial ones.

 

As Jason Sisney, the budget advisor to the California Assembly Speaker, recently wrote, the July 2024 budget deal was that budget cuts would be equitably distributed across state agencies, and UC and CSU cuts would make up 22 percent of the state’s projected budget shortfall. Instead, Governor Newsom wants to increase spending, increase tax breaks, reduce cuts to state agencies, drawn down reserves, and still leave cuts to UC and CSU in place to cover 53 percent of the state’s resulting budget deficit. 

 

In other words, the Governor is proposing balancing the state’s budget on the backs of its four-year college students. This will take the form of increased class sizes, increased tuition, and increased debt, and possibly even one or more CSU campus closures and mergers. 

 

Can Democrats Stand Up to Their Governor?

 

On April 25, 2025, State Senator Catherine Blakespear, who describes UC San Diego as “in the heart of my district”, sent an email to constituents titled “Fighting for UC.” In it, she decried the Trump administration’s research cuts to UCSD, and pointed out that UCSD had already implemented a hiring freeze and was reducing graduate student enrollment. 

 

What Blakespear failed to mention is that she has declined to sign onto a letter from more than 60 of her colleagues in the state legislature opposing cuts to the University of California’s budget. In fact, she didn’t mention the Governor’s proposed budget cuts at all, or encourage her constituents to speak out against them. 

 

Blakespear made it seem as if UCSD hiring freezes and budget cuts were coming from the federal government controlled by Republicans, when much if not most of it is currently coming from the state government controlled by Democrats.

 

Like many Democrats, Blakespear is happy to oppose Donald Trump’s policies. But when it comes to standing up to a Democratic Governor, will she or others really “fight for UC”?

 

In my conversations with multiple state legislators this term, both Republican and Democrat, I have yet to find a single one who wants to cut the UC or CSU budget. I have yet to find a single one who wants the quality of instruction to go down while the cost of tuition goes up. 

 

Many California state legislators graduated from one or more public colleges or universities in the state. They know that California voters are mostly proud of their public higher education system, and see it as a core part of the services that the state provides.

 

And yet, when you ask a California state legislator if they’d vote against a budget that includes cuts to the UC and CSU, most Democrats— even those who sign letters opposing the cuts— will tell you that they have no choice but to vote for whatever budget the Governor, the Assembly Speaker and the Senate leader negotiate behind closed doors. Their ability to move legislation requires ceding their agency on the budget, or else be ostracized by their party leadership. 

 

When you meet with the staff of the Assembly or Senate leaders, you get the reverse message: the leadership needs to hear as much as possible from members before they head into negotiations about the need to protect higher education. 

 

Few will commit. Almost everyone is equivocal. One legislator I met with repeatedly asked if we could talk about how the state legislature could oppose Trump’s attacks on higher education, so we could avoid discussion of the state budget altogether.

 

And some share legislators whispers that because the Governor provided a 6 month delay to people impacted by wildfires to file their income taxes, and a 12 month delay to file their property taxes, his “revised” budget proposal, coming very soon, is likely to be even worse. 

 

Not treating delays in revenue collection as shortfalls is also somehow off the table. 

 

Taking their cues from elected leadership over the past couple years, UC has already increased non-resident student tuition 10 percent, and the CSU system is in the midst of raising tuition 34 percent over 5 years. Who knows what more may be coming?

 

Fighting for Higher Ed at the State and Federal Level

 

Shared sacrifice may be necessary during times of budget woes, even ones created by administrative error. Yet we as college teachers, students, staff and community members need to tell our politicians that balancing the budget on the backs of college students is totally unacceptable. 

 

For decades, politicians across the US, regardless of political party, have consistently raided the budgets of their public universities during recessions, or to cover the rising costs of health care, corrections, and other services they don’t want to tax people for. Politicians may publicly bemoan tuition increases. But they secretly depend on increasing student debt to balance state government budgets.

 

That game may be coming to an end. It ultimately relies upon federal grants and loans to students that Republicans are threatening to eviscerate in what the Debt Collective has called “the most dangerous higher education bill in history.” And it relies upon students believing that the inferior education provided to them in increasingly large and online classes is worth going into debt.

 

It's up to campus labor unions to invest their resources into organizing not just their own members but organizing students and community members to contact their legislators to oppose state government budget cuts.

 

It would be great if the defense of public higher education only required standing up to Donald Trump. But for now, we also have to stand up to Democrats whose support for public higher education is always hostage to their other priorities.

 

Contact your legislator to Stop the Cuts!

·      UC-AFT: For teachers and librarians represented by AFT

·      Teamsters: For UC and CSU clerical workers and building trades

·      University of California: https://www.universityofcalifornia.edu/get-involved/advocate/state-budget

·      California State University: https://www.calstate.edu/impact-of-the-csu/government/Advocacy-and-State-Relations/Pages/Budget-Advocacy.aspx

I've fixed the mistake in the Los Angeles Times headline on Gov. Gavin Newsom's higher ed budget proposal for 2022-23.  In fact, if you add one-time money from the current and coming years, Newsom is proposing overall cuts to UC and CSU.

The base general fund increase is five percent next year (see summary slide above), with five percent promised each year for five years total in a new compact between the university systems and the state.  

Newsom delivered  the compact promise with a joke about how he knows the people who lived through the last (broken) compacts will doubt this one too.  Newsom signaling he knows we think Sacramento compacts are worthless doesn't make Sacramento compacts less worthless.  So I assume only next year's five percent.

Newsom's five percent is better than Gov Jerry Brown's annual two or three percent--apparently twice as good.  However, Newsom gets an inflation rate that is twice Brown's too. The Personal Consumption Expenditures (PCE) Index accelerated from 4.2 percent to 5.7 percent from July to November 2021. CPI hit 6.8 percent, and projections for inflation in 2022 by Fannie Mae and others suggest a five percent increase will be entirely consumed by inflation.  Hence the term "flat," and also my sense that the corrected headline is still optimistic.  For more than a decade, two Democratic governors have been giving UC and CSU flat annual budgets--when they are not cutting them.  That is not changing.

The other touted feature is that the state is funding residential enrollment growth.  Newsom proposes it support 6,230 new California undergraduates with $67.8 million (or $10,882.83 per student).  Again, it looks good compared to Jerry Brown.  He proposes an additional $31 million to buy out 902 nonresident slots at the three flagships (Berkeley, Los Angeles, and San Diego), at $34,368.07 per student. Don't ask me how they came up with those numbers.  What is clear is that the nonflagships are not getting state funding for the nonresident students they have been unable to admit because of the enrollment cap that emerged from the political blowback caused by the flagships.  Newsom sets up UC for a multi-year series of tuition carve-outs that allow the flagships to keep their nonresident tuition premiums, maintaining intra-campus budget inequality.

Most UC campuses are at capacity and have been for some time, so getting new students means hiring new faculty and staff and building or expanding facilities.  In practice, it means more costs and also more hardships for existing students. They will have even more trouble getting courses and housing.  Next year's per-student rate is less than half of what UCOP says is the average cost of instruction of each student (that is vastly more than most departments receive per major but never mind). We can say that $10,882.83 will at best cover costs of the new students and at worse create new deficits.  Like the base increase, this is not an increase in UC's per-student operating budget.  (The small "cohort tuition" hike will also make very little difference.)

Last fall, I suggested 2021 might well be, financially speaking, Peak UC.  The governor's new proposal confirms that fear about a stagnant 2020s of unfunded mandates.  Further confirmation came from UC president Michael Drake ritually praising the governor's generosity, putting a cap on growth in the bigger revenues.

I'm not going to go into more detail on the numbers until they settle down, and won't chart any trends until spring.  Newsom is right to see budgets as "expressing our values," as he said at the end, but his presentation was a numerical mess, referencing three different sizes of surplus ($42 billion, $20 billion, $31 billion), two from his own office, and identifying dozens of individual program totals from two different budget years.  So in the meantime, let's take a look at some other issues raised by the presentation, both on the campuses and the state as a whole.

Newsom has exactly two ideas about higher education. One is that it maximize access on the basis of diversity, equity, and inclusion (DEI).  The other is that it prepare students for jobs, and by jobs he means jobs in technology. 

Newsom makes state funding contingent on several 2030 goals: UC eliminating racial gaps in grad rates, getting grad rates to 76 percent for four-year students, and getting students to debt-free graduation. These are essential goals and UC must achieve them. But they require fundamental change in the UC business model.  That now depends on undergrad tuition subsidizing research and other activities--so less money is in instruction and student support, which hurts retention differentially across racial groups.  The business model also depends on saving a lot of university money (my estimate is $755 million in 2019-20 using Accountability data) by capping financial aid, therefore forcing undergrads to borrow and work during the academic year (see Stage 2 and Stage 5 respectively).  

This is such an important point--the need to fund goals rather than simply assert them--that I'll expand a bit. You improve graduation rates in part by hiring enough instructors so that every student can get every class they need, when they need it. Because of chronic underfunding, many or most students on all UC campuses wait quarters or years to get admitted into at least a few of their core required courses.

How do you reduce racial gaps in graduation rates? You offer personalized, individual advising to every student who wants or needs it.  You don't tolerate caseloads of 740 students for each advisor, which Laura Hamilton and Kelly Nielson, in their important book Broke, report is the case at UC Merced's school of Social Sciences, Humanities, and Arts (page 123). 

You also reduce racial gaps in graduation rates by taking students of color out of the cafeteria job they use to reduce their borrowing and into class: you cut their work hours ideally to zero while they are enrolled full time. You do not impose a Self-Help Expectation of $8,500 or $9,200 or $10,000 on every student with financial aid, even if they are low income, as every UC campus does. In other words, if you want to reduce racial gaps in graduation, you don't do this, for years and years: have a net cost of attendance of $10,000 per year (after financial aid) for students whose whole family earns $60,000 or less.

You also don't allow the poorest students to have the most debt at graduation.  

You stop doing these things by buying out financing gaps for poor and otherwise disadvantaged students, and then you put money into  personalized, intensive advising, well-funded student centers, and other things most UC faculty and staff could name off the tops of their heads.  When you start paying to provide these things, you're then able close your graduation gaps.

These are all things UC campuses want to do. None of them are things that either the governor or the legislature want to pay for.  None of them are things whose costs UCOP has itemized and justified in public in order to inspire the desire to pay for these essential things.

The governor mentioned diversifying university faculty.  This has been an explicit UC goal since the 1980s. Again there are racio-cultural obstacles. But the material ones are at least as important.  A diverse faculty comes from diverse doctoral programs, which means strong retention in those programs, means fully funding grad students from working-class backgrounds who are at greater risk of dropping out for lack of funds or excess debt.  UC does not fund its doctoral programs at the needed level.  

Thus in 2019-20, grad students went on a multi-campus strike over their rent burden, demanding a cost of living increase outside their union contract so they could cover costs in the private rental market. Nothing was done, and the students who started it (at UC Santa Cruz) were expelled for a while.  In the midst of the pandemic in early 2021, UCSD grads had to protest in the face of massive rent hikes in campus housing.  In 2022, rent burden is, if anything, even worse. The diversity of the faculty stops there, with unmanageable costs of living.  If it is serious about faculty diversity, UC should announce debt-free doctoral programs. But the governor and legislature would have to pay for it.

In sum, Newsom insists that UC close graduation gaps with essentially the same per-student funding that caused the gaps in the first place.  UC officials should point this out.

Now, on this question of college for jobs: Newsom and most policy people continue to work with a version of Human Capital Theory (HCT) descended from the 1950s, in which "learning equals earning."  In reality that is true only for a subset of students (generally already financially advantaged--for the theory's flaws see our LARB review-essay).  Policymakers are trying to fix the theory by saying, "tech learning equals earning," and UCOP encourages this splitting of STEM from other fields by publishing wages-by-major data.). 

Enter Gavin Newsom: propelled by half-baked but established neo-HCT, he is making these five percent state funding increase contingent on "supporting workforce preparedness and high-demand career pipelines," requiring 25 percent increases in degrees in STEM "and Education or Early Education" disciplines, as well as the same increase in "academic doctoral degrees," all by 2026-27.  The requirement is not exactly water-tight, and it also has a very weak justification in existing jobs projections.  The original 2015 report that started this "million missing college degrees" fixation shows most new jobs appearing outside of STEM (Figure 4).   Did anyone in the governor's office read the current occupational breakdowns for the state? It's the same story here, with tech a minor employer by size (though not by wages, which are high). But the STEM quota sails anyway, towing a legitimate fear about teaching shortages behind.

Even if the job market really did say STEM, it's an invasive step for a governor to mandate changes in degree outputs in a university.  Californians felt sorry for Floridians having to put up with Gov. Rick Scott making nasty cracks about anthropology and saying he didn't want taxpayers to foot the bill for useless degrees. Newsom is effectively doing the same thing. It raises allocation questions: Will new faculty lines to teach the expanded enrollments all go to STEM plus a few for education?  Will provosts need to stop hiring in arts and humanities for a number of years to pool lines in the "high demand careers"? Should California's future musicians, screenwriters, architects, designers, painters, film editors, historians, novelists, and journalists avoid the experience of being second-class citizens by going to UC? 

There are no answers, and this brings me to the experience of watching a governor's budget presentation on dozens of topics where the word "education" wasn't uttered until well after minute 70. Newsom organized his address around five existential threats. He had no vision of a New California, but ran through a series of hard problems that must be solved. I sympathize: he has not been having a joyful time. There's pandemic illness and also its political madhouse, with the recall trying to get rid of him for doing his public health job. There's drought and fire and the climate crisis behind them. There's the cost of living crisis. There's decades of underinvestment in transportation and other infrastructure.  There's a very polarized state economy, where a third of the workforce earns less than $15 per hour (page 3). There's a decades-old housing crisis, where so much private wealth has been absorbed into inflated housing assets that the state spent $5.2 billion last year--an additional University of California state budget--paying people's rent. 

Newsom brings a lot of energy to this slate of problems. He fired dozens of powerpoint bullets at them, each carrying a $100 M or $200 M or $1 B payload. But it's all the equivalent of filling (very important) potholes, keeping the electricity on, getting the shots in arms, giving the kids something to do in school until their parents get home.  

Even the tech future of green transition is remedial, trying to undig the hole of climate change in a state still almost entirely dependent on the private car.  There was something hollow in Newsom's enthusiasm for the state's green tech leadership: he cast the state's investment as bait for private investors, took it as an opportunity to hype the hegemonic tech sector that I think he quietly dislikes for its entitlement and arrogance as do most Californians, overpraised legislative honchos and others, and started referring to California as a "leader in this space" or that space--space being a term he used dozens of times.

Contrast this with how Newsom sounds on things he cares about. Then he is serious, knowledgeable, plainspoken, and open. What he really cares about is pre-K, school nutrition, homelessness, getting people out of encampments, mental health, universal health care, summer school for poor kids, a decent access to basic goods for disadvantaged people.  Whatever his neoliberal policies might be, Newsom's deeper desire, I felt watching him, is to ease the worst suffering.  This is also where he feels useful, even perhaps a bit of a hero.  But this desire doesn't find much to feed on in higher education as officials present it to him.

It's not just Newsom: the media isn't interested in higher ed either. During question time, the press had crisp questions about Newsom's contradictions on personal exemptions from Covid vaccines, his concrete plans for supporting reproductive rights, his borrowing of his recall opponents' plans for the mental health system, and his proposed changes in the Medicaid prescription program. They had nothing about higher ed.  This is a real problem for the sector. The governors' office doesn’t get vigorously questioned about higher ed, so they don’t prep for that, they rightly think the media and its consumers don't care about the details, so they never think, "we’re going to get pounded on mandating STEM degrees so we’d better think this through."  

I’ve written about Biden-era Democrats assigning college to a dedicated space in the welfare state. The good news is that they want government-run social development—Biden has in fact broken with key tenants of neoliberal Obama-Clintonism.  The bad news for higher ed is that the Biden-Newsom mainstream has no intellectual developmental plan for higher ed to address. Biden-Newsom are a real policy advance on Obama-Brown--an advance for children, the food insecure, the mentally ill, the unhoused, the uninsured, but not an advance for college students or the educational system.  

For them, the knowledge economy is abstract scenery, a slightly smoggy familiar sky.  We may need a million more college degrees, but that's just a logistics problem—there’s no interest in process or content or quality upgrades to say nothing of revolutions in thought or in the public's collective cultural and political capabilities. For them, UC and CSU are server farms that should run quietly in the background. There's nothing heroic about them, and they won't make a hero of any president or governor.  They are of modest interest as economic infrastructure. They are certainly not, for this Democratic party, a state engine of destiny.  

This could be changed, in a couple of diverging ways. One would be all three segments busting out of the workforce preparation trap and developing exciting stories of college-fueled individual and social transformation.  I know some deans and individual faculty who could do this. I don't know anyone at the senior manager level who would. Please correct me if I've missed some folks. 

The second, more plausible path is to comply fully with the mainstream Democrat welfarist passion. Inspiration is also needed here, that makes the state's politicians heroes of social justice. But that means defining the processes that would allow UC (and CSU) really to meet graduation and the other targets, and then setting their actual price. 

Fix the funding, or miss the goals. It shouldn't be a hard decision.

As the pandemic is brought under control, will conditions on UC campuses get better, get worse, or stay the same for the indefinite future? 

The evidence for "better" boils down to two things. First is the official UCOP interpretation of this year's legislative budget as one of the best increases ever, and thus a sign of state generosity to come. Second is the passage of the "cohort-tuition" plan, which will break the decade freeze on tuition income. The lead budget officials at regents' meetings, Nathan Brostrom and David Alcocer, have stressed the value of getting increases in both the state and tuition components rather than relying on increases on the state side only, where even a 5% increase translates into a 2% improvement in core funds, once it's averaged with zero on the tuition side. 

On the first point, the Academic and Student Affairs Committee was informed that "The 2021-22 State Budget provides the University of California with the largest-ever single-year funding increase, totaling $1.27 billion dollars."  Unfortunately, this greatly inflates ongoing funding. The net increase in continuing state funding is $243.5 million. I defined this real increase in relation to Gavin Newsom's May Revision. The permanent funding increase is slightly bigger in the final budget. 

UC Ongoing General Fund	2019-2020	2020-2021 (with cut retroactively restored)	2021-2022	2 year cumulative change
May Revision	$3,724.3 M	$3,766.0 M	$3972.1	6.65%
Summer Final	$3,724.3 M	$3,766.0 M	$4009.5	7.66%

Budget nerds will be pleased to see UC breaking the magic $4 billion barrier it has being aiming at for 20 years.  But the real news is the budget is the explosion of earmarked funds for special purposes.  The unallocated increase in general funding is $173.2 million. Everything else is a designated fund: for example, "$3 million for animal rescue operations in natural disasters."  9 such items get permanent funding. One-time funding goes to 27 more. 

I've never seen budgetary reach-in quite like this. In 2016-17, for example, there were 6+4 such earmarks.  The legislature is now treating UC as a platform for enacting pet projects, arriving from who knows where, that apparently fit less well in other state agencies. They incur costs to operate, so it's not obvious that they are overall net positive.

Long story short, the state reversed last year's $302 million cut and added $173 million this year, with $325 million in one-time funding for deferred maintenance (defined this year as a $7 billion systemwide problem).  Those are the meaningful items.  UC has no big boost from state funding.

The other half is cohort tuition, where each entering class has flat tuition for up to 6 years, but the next year's class pays more--the inflation rate plus an increment that declines annually from 2.0% to 0.  That will net in round numbers somewhat more than $100 million a year once it gets going.  UC tuition revenue is in the $4 billion range, so the new tuition plan will add 2 or 3% to the total.  Net benefit to core funds is around half that. A 1.0-1.5% increase to core funds is at best a steady-state number. 

These modest increases don't reflect increased costs.  UCOP estimates costs going up 4% a year no matter what. 

The most irresponsible omission is COVID-19 costs (including related losses). UCOP estimates somewhat more than $2 billion in lost revenues (Display 4); add to that an unknown amount of ongoing health mitigation costs (testing, quarantining, cleaning, and so on). The Democratic legislature pretended that these didn't exist when they cut $302 million at the height of the pandemic, and they are still pretending. Campuses will absorb these costs from their operating budgets, and that will mean cuts elsewhere.  

The state's refusal to fund has some familiar dimensions.  Employer contributions to retirement and capital construction are the two that will be known to readers (see the Essential Charts for a primer).  Pandemic shortfalls were covered by new UC debt, which also funded ongoing construction and other costs: UC took on an additional $6 billion in debt in the last fiscal year. This will have to be paid down out of med center and campus operating funds.  Debt translates a short-term into a long-term cost (see Alex Usher's good cross-national discussion). 

Another likely unfunded mandate is new resident enrollment.  In the mid-2010s, the Democratic legislature started not liking how high non-resident enrollments had gone, but also didn't like paying full cost for resident students (around $10,000 per head).  This hurt campus quality in the 2010s, particularly during the growth years after 2015, and is a major future issue, since "UC 2030" could hit quality again because of the growth involved--to increase degree output by 251,000 in this decade to meet state workforce needs.  This has been modified to adding 20,000 more resident students this decade, some at the graduate level (see the September meeting's planning document).  

Since at various points in its history UC has been hurt by underfunded growth, Brostrom and Alcocer emphasized the need for the state to follow through with funding this time: both to fund this enrollment growth and to fund the replacement of non-resident students with lower-paying residents (on the latter, see Mikhail Zinshteyn's overview).  They noted that the legislature has not funded some recent required growth, and showed this slide. 

In short, UC had recently added around 10,000 students who paid tuition but didn't bring any of the state funding they might have assumed their family taxes had paid for, so couldn't take another 20,000 on the same terms.

At this point, rolling all this together, you might conclude that UC campuses in the 2020s won't get better, but with all this UCOP vigilance about the state keeping its funding promises, at least they won't get worse.

This presentation occurred on the Finance and Capital Strategies Committee on September 29, chaired by Michael Cohen.  Before opening the floor for questions, he offered his response (at 2:22.30 once you scroll down this page). 

I've said this before, but I think it's important to repeat, particularly giving our conversation coming tomorrow about enrollment growth, that, sort of framing our budget ask in terms of, "oh, we were shorted money five years ago, and have been living with it ever since," as doing this in the unfunded enrollment context, I think is absolutely the wrong approach, and it really makes the university come off as, "well, we only serve students because we get paid for them, and we're not going to serve them if we don't get paid for them." 

So certainly the legislature has been very generous in its commitment to buy down our nonresident enrollment, and has really put a shining light on the need for the university to enroll students. But to suggest that we need to be paid back, for students we've been serving for years, it's just going to fall on deaf ears. And, frankly, it goes against all of the arguments the university made for years in that it wanted funding undesignated, and general purpose, so that they could decide the best way to use the funds. So, I hope that, when you bring back the budget in November, you heed these words and don't really emphasize this notion, which I don't even buy, of, you know, unfunded enrollment going back five plus years. 

Got that? Me neither. Clearly Brostrom and Alcocer's point was that the University did serve all students that were over the targeted enrollment that the state funded.  Regardless, Cohen in effect rejected all statements that tie doing things to having resources for them, such as "I would like to start my car, but I need gas in my tank"; "I would like to keep living in my apartment, but  I lost my job and can't pay rent"; "with extra enrollments, I need to offer 650 classes in each class period, but have only 615 classrooms"; "my professional staff requests a 3% salary increase, but the state has budgeted 0% for that."  

Rejecting the need for resources makes perfect sense -- as a labor of self-exoneration, since Cohen the regent is also Cohen the former budget director for Jerry Brown, and is thus the same person who didn't send the state money with the new UC students. But never mind, and enjoy picturing the world in which all Cohen cars start without fuel, no Cohen tenants are ever evicted, and all Cohen colleges run on goodwill toward students. 

Cohen's outburst had the predictable effect, which was to censor budget discussion and forestall calls for UC to reject unfunded growth (since that lowers per-students resources and quality).  No one objected to teaching grossly underfunded students, including the representatives of the Academic Senate.  The show moved on.

So what is really the plan here?  

It's not to insure that public university students learn about as much as private university students.  They aren't getting--or asking for--the money for that. 

It's not to increase access without diluting quality. Current budgets encourage, say, increasing biology B.A output by cutting math requirements, or maintaining study abroad enrollments by eliminating foreign language acquisition.

It's not to overcome structural racism by insuring that minority-majority campuses are as well-funded as white campuses.  That kind of budget justice is not being supported. 

It's not to reverse the shift away from tenure-track hiring or to fund significant staff cost-of-living increases.

It is not to reduce financial burden for UC students. Solving grad student rent burden is off the table. So is reducing the academic costs of student debt.  

A UCOP talking point has been that net cost of attendance will go up more slowly with cohort tuition increases than with flat tuition for all but the most affluent students. (The grounds are that higher tuition funds higher financial aid.)  In fact, student self-help expectation starts high even for the poorest UC students (about $11,000 per year for under $20,000 in family income, Display 6), and under the cohort plan, goes higher (to around $15,000 for the under $20,000s by 2028-29). Self-help expectation is set by campus officials, and is money that students who don't have private assets must earn by working while enrolled, which reduces study, or by taking on debt. The best solution for students would be low tuition so aid covers all living costs and their self-help expectation approaches zero).  But that is not anything UCOP or the legislature would currently discuss.  The large share of UC students who struggle with daily life will continue in the 2020s to struggle with daily life.

The plan is also not to increase funding for cultural and social research, which depends on institutional funds, though there is an obvious crying public need.

The plan is to do workforce-oriented enrollment growth at the lowest possible cost.  

The de facto plan focuses on quantity rather than quality of degrees. It defines educational value through graduates' future earnings, which means directing majors towards professions that pay more. It means reserving any new direct federal funding for 2-year colleges, tweaking financial aid (increasing Pell Grant maximums), and supporting funds that go directly to students or to student support programs, like the Student Academic Preparation and Educational Partnerships (SAPEP) program, one of UC's 27 one-time earmarks. 

(Note also that the "Proposed 2030 Framework Investments" are split about 50/50 between hiring new faculty to teach 20,000 more students and growing student support programs [Display 6], thus halving the faculty hiring.)  

It also means burying quality problems behind the marketing of UC excellence: UC dominates the public university rankings, and recent news of Berkeley as Forbes #1 and US News' Top 10 publics give UC campuses zero incentive to increase investment. 

 The same is true for the extremely high rejection rates at many UC campuses, further hardening the aura of impregnable prestige. UC's per-student resources are well below their level of 20 years ago, but so what, since its rankings are so very high--and applicant demand is through the roof? 

People like me argue that these rankings are not only invalid but now oddly immune to matters of educational quality, and selectivity obviously conflicts with access, and yet their image-making power, and the genuinely high quality of UC faculty, staff and students as individuals, pave the yellow-brick road to low-cost growth.  

Usher sums it up well when he writes, "there are very few places with extra domestic billions to spend out there, and where there are . . . as often as not, they want to spend the money to make existing spaces cheaper, not expand the number of spaces or make existing education better."  UC is options 1 and 2--more and cheaper. This Workforce UC isn't fated, but fixing it will mean a fight.

A few things have happened since California Gov. Gavin Newsom proposed an austerity budget in January. 

State tax receipts came in higher than expected (though they will not rise next year).

A recall campaign collected signatures amounting to the required 12 percent of registered voters, so Newsom is now running for governor. 

Joe Biden's American Rescue Plan sent the state $27 billion.

And Biden's three big Plans far outstripped anything California Democrats have offered the state since Grey Davis was recalled in 2003, leaving them paddling in Biden's wake. 

Needing to get out in front of Biden's quasi-New Deal advance, and to show some post-pandemic achievement, on May 14th Newsom announced his "generational" state budget, a "historic, transformational budget."  Here of course we welcome with open arms Newsom's recognition that solving California's problems means massive government spending, since it is true. The K-12 increases are especially welcome, as are those trying to reduce the state's long epidemic of houselessness. 

Yet like Biden, Newsom sees a narrowed function for four-year colleges and universities, and is funding them accordingly, meaning meagerly.

The press did find his historic numbers hard to follow.  Writing in the LA Times, John Myers noted the range of the proposals 

The governor’s list of spending priorities, which rely on a surprise cash infusion spread over several years that is projected to ultimately top $100 billion, is dizzying: money to house those who are homeless, support entrepreneurs, train workers, educate students and connect them to the internet, fix roadways, prevent wildfires and strengthen California’s power grid.

He then added politely, "It could be some time before the numbers outlined by Newsom can be fully reconciled. The governor frequently uses unorthodox ways to measure state spending, lumping together dollar amounts that span multiple years." The $100 billion in economic assistance translates into a budget increase of $40 billion in the current year--still an excellent increase, but one that should be defined correctly.

Reconciliation will involve a couple of simple moves. One is to separate multi-year from single-year numbers. Myers does that in contrasting the headline $100 billion with the annual $40 billion.

The other move that's especially relevant to higher ed budgeting is separating ongoing from one-time funds. The former commits the state to program building over time. The latter does not. 

UC's president and Board of Regents chair issued a statement to say, "The University of California is deeply grateful to Gov. Newsom for proposing the largest state investment in UC’s history: more than $807 million."  In his press conference (around minute 52 in the version helpfully archived by Dan Mitchell) Newsom correctly describes the permanent investment as an increase in $506 million. It's better than the $136 million he proposed in January. But as with all these budget announcements, don't read the headline, read the top line (in the slide at the top).

Here's the table that Newsom's Department of Finance published, in the Higher Education section of the May Revision.

The second row of figures is UC's Ongoing General Fund. Newsom and legislative Democrats cut UC's general fund during the pandemic year; later they decided to give it back, but not until the following year (2021-22). 

We can redo the table so that it tracks only the state's permanent commitment to UC, in the form of ongoing general funds.  I give the one-time general fund restoration back to the year to which it belongs--2020-21.  

UC Ongoing General Fund	2019-2020	2020-2021 (with cut retroactively restored)	2021-2022	2 year cumulative change
	$3,724.3 M	$3,766.0 M	$3972.1	6.65%

The one-year increase is 5.5 percent. Note that UC's GF allocation still falls short of the magic $4 billion ceiling it's been trying to break through for twenty years (in unadjusted dollars, so the real problem is worse--I discussed this issue in "Shortfall," covering the history that made Newsom's January budget such an affront).  

This increase is obviously better, but you don't get to break the $4 B barrier by restoring a cut to permanent general funds one year late. More importantly, an average annual increase of a bit more than 3¼ percent does not qualify as "the largest state investment in UC history."  It doesn't justify the "huge budget boost" trumpet blast in this LA Times headline, or the statement cosigned by UC president Drake and board chair Pérez.

There are other commitments, all one time, where the main money goes to 2 things: workforce preparedness and student housing.  

State underfunding has helped turn student housing into a scandal of private development, one that has led to overpricing, blown open this March when UCSD housing announced average rent increases for doctoral and professional students of 31 percent. Newsom proposes $4 billion (over 2 years) for a "low-cost student housing grant program focused on expanding the availability of affordable student housing." The money may well go to subsidize the private developers that helped cause the affordability problem--details are sparse.  It's a major problem, but would best be solved by the state restarting continuing allocations to capital projects, which it ended around 2006.

For the workforce, Newsom proposes $1 billion (over 2 years) "to establish the Learning-Aligned Employment program, which would promote learning-aligned, long-term career development for UC, CSU, and CCC students." The money would form a permanent endowment.  Again there are no details: much better student advising is not mentioned, but employer partnerships are, so it may turn out to be a state subsidy for apprenticeship programs. 

Newsom proposes little or nothing in core needs.  Deferred Maintenance, a problem totaling tens of billions, gets $325 million in one-time funding, which for DM is a contradiction in terms. UCLA's Asian American Studies Center gets $5 million in one-time funding to research "the prevention of hate incidents." He recommends $40 million more than that for the animal shelter medicine program at Davis. 

A better way to fight racist hate crimes would be to fully fund critical ethnic studies, gender, queer, and trans studies, political theory, sociology, history, and the other non-STEM fields that study these issues systematically and have long offered detailed solutions. That is not happening, and I will return to this issue a bit later this year.

Newsom's thinking aligns with Biden's and the national party in a few important ways. They both continue the decades-old drift toward giving public funds to students rather than to institutions.  Student money escapes the instructional and (non-sponsored) research core, whose complexity and costs keep rising, but whose growth in operating money does not keep up. 

Second, they are using higher ed as a kind of renewed welfare state. Newsom knows it is politically hard to address the state's housing affordability crisis with a massive public housing program for working- and middle-class people, but politically easy to subsidize private developers to build public housing for students.  The public colleges' working poor would be affordably housed for a few years. 

The same goes for health and related social services (legal support for undocumented students, food security, transition support for formerly incarcerated students).  I favor this full suite of public support systems--it's the point of the Real College movement--but want them to be integrated into the society at large, funded through progressive taxation of the overall population, and not used as a substitute for funding advanced education.  

Third, Newsom and Biden see higher education as workforce training for economic growth. They also tie that mainly to community colleges rather than to four-year degrees.  Newsom bundles his two biggest one-time programs into an aggregate with a largish headline number that must be shared by the 3 segments, and which treats the segments and their students as the same.  Newsom is joining Biden in demoting four-year colleges and universities, which is an anti-progressive trend that universities will need to fight.

This budget is a lot better than a cut. But it's not the New New Deal.  I'd feel better about where it might lead had president Drake and board chair Pérez described it accurately and set out ongoing needs.  But they did not.  

Here's an update of the January chart, for context.

 

Two years of context helps to understand the state Democrats' plan for UC, expressed in the Governor's budget proposal this month.

 In November 2019, UCOP sought to end UC's worst modern budget decade with a some meaningful funding growth. The 2010s had brought many negative net revenue effects:

• state funding cuts and subpar annual general fund increments
  

tuition freeze (welding shut UC's revenue safety value)

restart of pension contributions with no permanent state support for employer share

end of state funding for new construction

no state funding for deferred maintenance (backlog estimates ranging from $6.2B to $14B)

Campuses had diligently followed instructions to seek multiple revenue streams.  The two most familiar are non-resident tuition and for-profit degree programs (SSDPs).  

A third revenue stream has been institutional debt. It stands at $26.7 B (page 16), up 85 percent from $14.4 B in 2011 (page 15). (UC debt is also up year-on-year by around $2B from 2019, mostly in the form of new Medical Center Pooled Revenue Bonds. This does not include an additional $2.8 B in Covid-related borrowing in summer 2020, with more to come.)

Even before Covid-19 appeared, three UC flagship campuses were projecting deficits in the first half of hte 2020s. See "Destined for Deficits" for flagship details; see "The Essential Charts" for the twenty-year system pattern. Funding crises have long been visible on the campuses: UC Berkeley's VP for Finance and Administration called the funding model unsustainable in 2013.

Such news doesn't usually make it into presentations to the regents, so in this context UCOP's November 2019 budget document was unusually graphic.  It identified many areas of functional deterioration at UC. These included sharp increases in the number of students per ladder-faculty member, the same for student:staff ratios, and faculty salaries that had spent at least 20 years at around 10 percent below comparators. 

The document identified a chronic problem with state funding that usually escapes notice: net new funding is generally a fraction of the headline state increase, because it must cover terminated previous one-time funding or new mandated activities. 2018-19's headline increase of 7.1 percent yielded 0.7 percent as a "net available for sustaining core operations"--a fraction of that year's 3.5 percent inflation rate (Display 7). 

UCOP established this 2019 narrative of UC damage to justify that year's proposal for a modest "cohort-based" tuition plan, which would allow tuition increases at about inflation, fully in place after 4 years. It was a toddler-sized foot in the door, but it was a foot. The overall plan would have brought UC's state general fund allocation to just about $4 billion.

The result: Newsom cut the Regents' request for $447M for 2020-21 down to an increase of $217M. Then there was Covid, and the state cut UC $300.8 M instead.  The Department of Finance puts UC's general fund allocation for the current year at $3.465 B.

In November 2020, the regents adopted a UCOP request for an additional $518.2 M for 2021-22.  Once again, UC would be inching towards the magical $4 B level.  $300.8M of this was trying to fill in the 2020-21 cut--to keep that reduction from forming a permanently reduced baseline. There was $157.6 M for mandatory cost increases--salaries, benefits, and debt service--and about $60 M for improving student outcomes in ways mandated by the legislature.  

This month, Newsom came back with a proposal for $136.0 M. He will not backfill the permanent cut of  $300.8 M, even on a one-time Covid-19 emergency basis.  UC keeps that hole and is to receive 86 percent of what it had defined as mandatory cost increases (negotiated wage increases and benefits, among other things).  That was one of five General Fund items the regents voted in November to request. They got none of the other four, though Newsom did recommend $225M in one-time funds for deferred maintenance and some other items.  The governor's proposal would put UC's general fund at $3.6 B. That's about the level of 2017-18. It's also about the level of 2007-08, unadjusted for inflation.

 In a regents' committee meeting on January 20th, UCOP officials summarized the governor's budget in a few slides. 

 The 3 percent base increase is on the new, permanently-reduced amount. The rest are line-items that normally a public university would fund out of general operating money. UC PRIME is an example-- a diversity-oriented medical education program for underserved areas that UC Health should just pay for out of operations. Same for legal services for undocumented students, which should be funded as one among many permanent student services.  

Next slide: DM gets $175 M in one-time funds, and more earmarks are added. The DM figure is about 1.25 percent of a reasonable estimate of system-wide deferred maintenance, so at this rate UC will fix this year's back log about 80 years from now.   Except it's not annual money . . .

 The final slide notes the continuation of the tuition freeze and an accelerated deadline for closing equity gaps in student attainment.

These are all long-established goals, particularly turning UC into a workforce training system, which hails from the 1980s and 1990s, and which was re-emphasized by Newsom in his first budget. Such goals are also priced in to allocations, so new efforts at pursuit will never receive a reward. 

In short, Newsom restores Jerry Brown austerity in the form of frozen tuition and sub-inflation net state funding. We all hate the phrase, but this is classic "do more with less"--with no state interest in its effect on UC viability.

This budget presentation to the regents was more negative than UCOP's previous messaging about the governor's proposal. After Newsom's release, the UC president immediately thanked him for, in effect, providing one quarter of his request. This signaled to the media that the governor was being very supportive of higher education and that his proposal was good news. Poor Teresa Watanabe, the LA Times's UC & higher reporter, with her colleague Nina Agrawal, had to try to write a coherent story. They cited all three system heads calling the budget a "welcome reinvestment," to quote CSU's chancellor Joseph Castro, while noting that Newsom did not use the unexceptedly good state revenue picture to undo the current year cuts or to come close to matching the requests. The only figure in the story who suggested damage to educational quality was a (former) chancellor,  George Blumenthal, with direct experience of a campus.  

Taking the LAT coverage and the UCOP budget presentation together, we have these budget stories.

• It's under control. Wait until next year (UCOP budget officials)
• Funding is very complex. UC is the greatest public university (UC president)
• The governor is reinvesting in higher education (heads of UC, CSU, & CCC)
• California Democrats are degrading the quality of UC (and CSU & CCC) through underfunding (the occasional chancellor plus random bloggers)
  

One of these tales is not like the others. It is far less pleasant to consider. It is also true. But in the absence of budget context, budget history, and budget needs--absences actively generated by the first three stories--the fourth can't establish a claim on reality.  The situation keeps the quality narrative obscure. If it does, the gap between means and funds will continue to grow.

Figure 1: State General Fund Allocations to the University of California Compared to State Per-Capita Income Growth, 2001-2022, with Regents Budget Request 2020-22.

The gap is learning and research (and eating and rent-paying) that doesn't happen.

***

Data from California Department of Finance (UC general fund allocations) and from the Legislative Analyst's Office data and forecasts for state personal income growth.  Charts with tuition revenue and other details are presented and discussed here.   Photo Credit